What are the major factors of production in the UAE? What is the comparative advantage of the UAE compared to Lebanon? 

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kipling2448 | (Level 3) Educator Emeritus

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The major factors of production in the United Arab Emirates can only be considered in relative terms and, as the student's question references Lebanon, another country in the Middle East, such a comparative analysis is quite simple.

The United Arab Emirates is actually a federation of seven quasi-independent entities, united under the umbrella of the U.A.E., the leader of which is Abu Dhabi. Each of these emirates develops economically somewhat independently of the others, which accounts for the vast distinctions between, say, Dubai, and Ras al-Khaimah, one of the wealthier of the emirates and one of the least economically developed. The capital, Abu Dhabi, is enormously wealthy thanks to its vast oil deposits. Dubai, which lacks oil and natural gas wealth, has turned itself into an economic power through its determined focus on becoming the region's main financial and commercial center (a role it is sort of stealing from the kingdom of Bahrain). Sharjah is similarly developing quickly as a commercial hub. The other emirates, however, remain, at various levels, less affluent. When discussing the U.A.E. as a center of manufacturing, then, one would logically focus on those less affluent of the emirates, especially Ras al-Khaimah and Fujairah, the latter probably too small and mountainous to support much of a manufacturing base. It is in these less-developed emirates where the costs of production would logically be lower, as Dubai has emerged as a very costly locale and Abu Dhabi is focused more on its natural resources.

The main advantages of the U.A.E. would lie in the relatively low cost of production in the smaller and less-developed of the emirates. And, that's about it. The U.A.E. simply does not lend itself to a large indigenous manufacturing sector. Its population is small and the country imports most of its labor force from other, poorer countries like India and the Philippines, as well as from other Arab countries. The U.A.E. also, typical of the region, has a very poor human rights record, mostly involving its autocratic government and intolerance of practices that are perceived as potentially threatening to the ruling monarchs, like free speech and free association. Additionally, its treatment of the hundreds of thousands of foreign laborers upon which it relies is abysmal.

Comparing the U.A.E. to Lebanon is a somewhat spurious exercise given the situations in both countries. Lebanon, politically, is a mess. Its population is fractious, with Sunni and Shi'a Muslims at each other's throat and the country's Christian population positioned warily between the two. Southern Lebanon is controlled by the Islamist Hezbollah, a terrorist organization that emerged as a major player in the nation's politics, to the consternation of the Sunni population in the northern cities and town. And then there's the Druze population, a mountainous and politically-powerful clan that, similar to the Christians, eyes the Sunni and Shi'a warily. Lebanon was torn apart by a civil war that lasted from 1975 to 1990, and the southern-most part of the country was occupied by Israel, which invaded in 1982 in an effort at clearing out the Palestinian terrorist organizations that had previously occupied southern Lebanon. In short, Lebanon is not a practical option for a long-term manufacturing base. Beirut, prior to the civil war, was a regional center of tourist activities, commonly referred to as "the Paris of the Middle East." While it had been successfully rebuilding itself, the capital city remains subject to the political and military machinations of the armed factions that continue to threaten the nation's stability.

In conclusion, Lebanon does not present a viable option as a center of production, which is unfortunate but a reality of a country deeply divided politically, ethnically, and religiously. The U.A.E., in contrast, is politically stable and peaceful, but its population is small and its human rights record poor. Pick your poison, in other words.

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